Opinion of the European Central Bank of 13 October 2016 on a draft law to facilitate the reimbursement of certain spreads charged on foreign exchange-linked loans (CON/2016/50)
Date: 2016-10-13
Institutions: European Central Bank
Subjects: Poland, debt, exchange rate, financial stability, foreign currency, loan, national law

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 13 October 2016  

on a draft law to facilitate the reimbursement of certain spreads charged on foreign exchange-

linked loans 

(CON/2016/50) 

Introduction and legal basis 

On 15 September 2016 the European Central Bank (ECB) received a request from the Polish Parliament 

for an opinion on a draft law to facilitate the reimbursement of certain amounts due under loan and cash 

advancement agreements (hereinafter the ‘draft law’).  

The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 
Functioning of the European Union and the sixth indent of Article 2(1) of Council Decision 98/415/EC1, as 

the  draft  law  contains  rules  applicable  to  financial  institutions  insofar  as  they  materially  influence  the 

stability  of  financial  institutions  and  markets,  which  relates  to  the  ESCB’s  contribution  to  the  smooth 

conduct  of  policies  pursued  by  the  competent  authorities  relating  to  the  stability  of  the  financial  system 

under  Article  127(5)  of  the  Treaty.  In  accordance  with  the  first  sentence  of  Article  17.5  of  the  Rules  of 

Procedure of the European Central Bank, the Governing Council has adopted this opinion. 

1.  

Purpose of the draft law 

1.1  The  purpose  of  the  draft  law  is  to  facilitate  the  reimbursement  to  borrowers  of  foreign  exchange 

spread  amounts  considered  to  be  unfairly  charged  by  banks  in  connection  with  certain  secured 

loans  denominated  in,  or  indexed  to,  a  foreign  currency  (hereinafter  ‘foreign  currency  loans’). 

Borrowers who may benefit from the draft law include consumers as well as natural persons who 

are  sole  traders,  provided  that  they  did  not  invoke  any  depreciation  charges  with  respect  to  the 

property acquired using the foreign currency loan and did not claim as tax-deductible expenses the 

interest and other charges arising from such loan. 

1.2  The draft law applies to loan agreements entered into between 1 July 2000 and 26 August 2011, 

even if such loan agreements have terminated, provided that the loan agreement contained at least 

one of the following three features: 

(i) 

in the case of an indexed loan (i.e. a loan granted in Polish zloty (PLN), which in accordance 

with the loan agreement is equivalent to a specific foreign currency amount or is indexed to, 

or  revalued  in  line  with,  a  foreign  currency),  where,  at  the  time  the  loan  was  granted,  the 

1   Council Decision 98/415/EC of 29 June 1998 on the consultation of the European Central Bank by national authorities 

regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42). 

 
 
 
 
                                                 
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exchange  rate  used  was  lower  than  99.5  %  of  the  selling  rate  of  Narodowy  Bank  Polski 

(NBP) for the foreign currency to which the loan is indexed, as published by NBP on the date 

on which the foreign currency amount was determined; 

(ii)  

in the case of a foreign currency denominated loan (i.e. a loan granted in a foreign currency 

that  was  disbursed  in  PLN),  where,  at  the  time  the  loan  was  granted,  for  the  purpose  of 

determining the loan amount or its tranches to be disbursed in PLN, the exchange rate used 

was  lower  than  99.5  %  of  NBP’s  buying  rate  for  the  foreign  currency  in  which  the  loan  is 

denominated, as published by NBP on the date on which the conversion to PLN of the loan 

amount or its tranches occurred; or 

(iii) 

in the case of an indexed loan or foreign currency denominated loan, where for the purposes 

of converting PLN to the foreign currency in which the loan instalments, fees or charges are 

expressed,  the  exchange  rate  used  was  higher  than  100.5  %  of  NBP’s  selling  rate  for  the 

foreign  currency,  as  published  by  NBP  on  the  due  date  for  such  loan  instalments,  fees  or 

charges or, where payment was made after the due date, on the payment date. 

1.3  A borrower has six months after the entry into force of the draft law to request the lender to notify 

the  borrower  in  writing  whether  his  or  her  loan  agreement  contains  any  of  the  abovementioned 

features.  The  lender  is  required  to  provide  the  notification  within  30  days  of  receipt  of  the 

borrower’s  request.  If  the  loan  agreement  contains  any  of  the  abovementioned  features,  the 

lender’s  notification  must  also  specify:  (i)  an  amount  expressed  in  the  relevant  foreign  currency 

which represents the difference between the value of the relevant loan principal, instalment, fee or 

charge as calculated based on the exchange rate actually used at the relevant time and the value 

of  the  same  loan  principal,  instalment,  fee  or  charge  as  calculated  using  the  relevant  NBP 

exchange  rate  decreased  or  increased  by  0.5  %,  as  applicable,  and  (ii)  interest  on  the  amount 

referred  to  in  point  (i)  calculated  at  50  %  of  the  statutory  interest  rate.  The  draft  law  provides 

formulae for the calculation of the amounts referred to in points (i) and (ii).  

1.4  Within 14 days of a written request by the borrower (to be made within 12 months of the lender’s 

notification  specified  in  paragraph  1.3),  the  lender  must  (i)  reduce  the  principal  of  the  foreign 

currency  loan  by  the  sum  of  the  amounts  referred  to  in  paragraph  1.3,  or  (ii)  where  such  sum 

exceeds  the  outstanding  principal  of  the  foreign  currency  loan  or  the  loan  principal  has  been 

repaid, pay such sum to the borrower. A borrower who disagrees with the content of the notification 

referred to in paragraph 1.3 may, within two months of receiving the notification, lodge a complaint 

with  the  lender.  However,  the  lodging  of  a  complaint  does  not  affect  the  borrower’s  right  to  the 

reduction of principal or payment of the surplus amount. 

1.5 

Irrespective of the amount of the foreign currency loan, the borrower is entitled to exercise the right 

to  reduction  or  payment  of  the  surplus  amount  only  to  a  maximum  loan  principal  amount  of 

PLN 350 000.  

1.6 

If the lender fails to fulfil its obligations under the draft law, the borrower is entitled to compensation 

amounting to 0.01 % of the outstanding loan principal. In addition, the Polish Financial Supervision 

Authority  may,  as  the  body  entrusted  with  the  supervision  of  lenders’  compliance,  impose  on  a 

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lender a penalty of up to 0.002 % of the value of the lender’s outstanding foreign currency loans for 

each day that the lender fails to comply with its obligations under the draft law. 

1.7  The draft law is intended to enter into force within 30 days of its promulgation. The exercise by the 

borrower  of  rights  under  the  draft  law  does  not  affect  the  borrower’s  right  to  initiate  or  continue 

court proceedings with respect to claims related to the loan agreement. 

2. 

General observations 

2.1  Prior to the global financial crisis, borrowing in foreign currencies by households and non-financial 
corporations was popular in several Member States2. As previously noted by the ECB3, the lower 

interest rates applicable to foreign currency loans compared to loans in the domestic currency, as 

well  as  the  expectation  of  domestic  currency  appreciation,  increased  the  demand  for  such  loans. 

The  ECB  understands  that  most  of  the  foreign  currency  loans  in  Poland  are  housing  loans 

denominated  in  Swiss  francs  and  that  foreign  currency  housing  loans  constituted  approximately 

43 %  of  all  outstanding  housing  loans  and  26  %  of  all  outstanding  loans  to  households  in  July 
20164. 

2.2  The ECB has previously been consulted by the Polish Parliament and issued opinions on two draft 

legislative  proposals,  which  were  subsequently  not  adopted,  dealing  with  the  restructuring  of 
foreign currency loans5. The ECB notes that, unlike the previous two proposals, the draft law does 

not propose solutions involving the conversion of foreign currency loans into PLN loans. 

3. 

Specific observations 

Retroactivity 

3.1   Although Directive 2014/17/EU of the European Parliament and of the Council6 does not apply to 
credit agreements existing before 21 March 2016, as previously noted by the ECB7, the retroactive 

effect of the draft law does not seem to be in line with the general aim and principle of Article 23(5) 

of Directive 2014/17/EU. This provision allows Member States to further regulate foreign currency 

loans on condition that such regulation is not applied with retroactive effect. 

3.2  

In  addition,  as  previously  noted  by  the  ECB8,  introducing  measures  with  retroactive  effect 

undermines  legal  certainty  and  is  not  in  line  with  the  principle  of  legitimate  expectations.  It  is 

2   For further information on lending in foreign currencies in the Union see the Annex to Recommendation ESRB/2011/1 of 
the European Systemic Risk Board of 21 September 2011 on lending in foreign currencies (OJ C 342, 22.11.2011, p. 1). 
3   See  paragraph  2.2  of  Opinion  CON/2014/59,  paragraph  2.1  of  Opinion  CON/2015/26,  paragraph  2.1  of  Opinion 
CON/2015/32  and  paragraph  2.2  of  Opinion  CON/2016/39.  All  ECB  opinions  are  available  on  the  ECB’s  website  at 
www.ecb.europa.eu . 

4   See the NBP’s  Monetary and financial statistics report at http://www.nbp.pl. 
5   See Opinions CON/2015/26 and CON/2016/39. 
6   Directive  2014/17/EU  of  the  European  Parliament  and  of  the  Council  of  4  February  2014  on  credit  agreements  for 
consumers  relating  to  residential  immovable  property  and  amending  Directives  2008/48/EC  and  2013/36/EU  and 
Regulation (EU) No 1093/2010 (OJ L 60, 28.2.2014, p. 34). 

7   See  paragraph  3.2  of  Opinion  CON/2014/59,  paragraph  2.2  of  Opinion  CON/2015/26,  paragraph  3.2.1  of  Opinion 

CON/2015/32 and paragraph 3.1.1 of Opinion CON/2016/39. 

8   See paragraph 3.2.2 of Opinion CON/2015/32 and paragraph 3.1.2 of Opinion CON/2016/39. 

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however  for  the  Polish  authorities  to  assess  whether  the  retroactive  character  of  the  draft  law 

complies with Polish legal and constitutional principles. 

Effects on the banking sector, financial stability and the Polish economy 

3.3  The  ECB  reiterates  its  comments  regarding  risks  associated  with  foreign  currency  loans  made  in 
previous opinions9. Nevertheless, in the case of Poland, such risks do not, at present, appear to be 

of a systemic nature for the financial system and are not seen as representing a particular risk from 

a  financial  stability  perspective.  The  ECB  also  notes  that  the  draft  law  is  mainly  justified  by 

considerations related to consumer protection. 

3.4  The  ECB  notes  that  implementation  of  the  draft  law  may  entail  significant  financial  costs  for  the 

banking sector. The explanatory memorandum estimates the implementation cost of the draft law 

for  banks  at  between  PLN  3.6  billion  and  4.0  billion  (i.e.  approximately  EUR  830-920  million). 

Nevertheless,  considering  the  significant  uncertainties  relating  to  the  estimation  methodology,  as 

well as additional operational costs, it is possible that the actual cost of implementing the draft law 

for  banks  will  be  higher  than  the  legislators’  estimate.  In  this  respect,  the  ECB  notes  that,  in  its 
opinion on the draft law10, NBP estimates the cost of the draft law to be twice the cost indicated in 

the explanatory memorandum, suggesting it could amount to two thirds of the annual profits of the 

domestic banking sector in 2015. 

3.5  As  the  ECB  has  noted  previously11,  introducing  measures  with  retroactive  effect  may  also  have 

some  negative  impact  on  the  Polish  economy  if  it  leads  to  a  deterioration  in  foreign  investor 

sentiment due to a perceived increase in legal uncertainty and country risk. 

3.6  Consequently, the ECB encourages the Polish authorities to carry out a thorough analysis to better 

quantify  the  financial  stability  implications  of  the  draft  law,  in  particular  whether  the  envisaged 

retroactive  measures  could  have  negative  effects  on  credit  institutions  taken  individually,  the 

banking  sector  as  a  whole  and  the  overall  economy  in  Poland.  In  particular,  due  consideration 

should be given to the capital adequacy of the affected institutions and cross-border effects on the 

consolidated profits of international banking groups. 

3.7  With  regard  to  any  potential  negative  effects  of  the  proposed  measures,  the  ECB  remains  of  the 

opinion that due consideration should also be given to fair burden sharing among all stakeholders, 
thus also avoiding moral hazard in the future12. The ECB also expects that the solution proposed 

by the draft law should be balanced with regard to the impact on local and foreign owned banks. 

3.8  Finally,  the  ECB  notes  that  the  scheme  introduced  by  the  draft  law  does  not  comprehensively 

eliminate risks relating to foreign currency loans. 

9   See paragraphs 3.3.1 and 3.3.2 of Opinion CON/2015/26 and paragraph 3.3.1 of Opinion CON/2016/39. 
10  Available on the Polish Parliament’s website at http://orka.sejm.gov.pl.  
11  See paragraph 3.4.1 of Opinion CON/2015/26 and paragraph 3.3.3 of Opinion CON/2016/39. 
12  See  paragraph  3.4  of  CON/2014/59,  paragraph  3.3  of  CON/2014/87,  paragraph  3.3.4  of  Opinion  CON/2015/26  and 

paragraph 3.3.6 of Opinion CON/2016/39. 

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Miscellaneous 

3.9 

In line with the opinion expressed by NBP, the ECB also has some technical comments regarding 

the  method  indicated  in  the  draft  law  for  calculation  of  the  amount  of  a  spread  refund.  First,  the 

value of the spread refund is denominated in a foreign currency and not in PLN, which may result 

in an increased benefit to borrowers. Second, the formula used for the computation of the spread 

refund in respect of indexed loans refers to the NBP selling rate while the NBP buying rate is used 

in  the  formula  for  foreign  currency  denominated  loans.  Use  of  these  different  NBP  rates  could 

result  in  borrowers  with  indexed  loans  receiving  a  much  greater  refund  in  PLN  terms  than 

borrowers with foreign currency denominated loans granted for the same amount.  

This opinion will be published on the ECB’s website. 

Done at Frankfurt am Main, 13 October 2016. 

[signed] 

The President of the ECB 

Mario DRAGHI 

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